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Samsung, LG Lead an Improving Handset Market, Says Report

The global mobile handset market is on the mend. Samsung and LG shipped record volumes in the third quarter, though Nokia, Sony Ericsson and Motorola lagged. Growth is expected for the fourth quarter, "signaling an end to the recession," states the report.

Good news for the global mobile handset market: An Oct. 30 report from Strategy Analytics found third quarter 2009 shipments to have improved over previous quarters. While the worldwide handset market showed an average decline of 11 percent over the previous three quarters, the third quarter of 2009 saw 291 million units shipped worldwide - which is down only 4 percent from the 304 million units a year earlier."We forecast the handset industry to return to positive growth in the fourth quarter of 2009, signaling an end to the recession," wrote Neil Mawston, an analyst with Strategy Analytics and author of the report.Nokia was again the global market leader, followed by Samsung, LG Electronics, Sony Ericsson and Motorola. South Korean vendors Samsung and LG, however, showed the strongest performance by shipping record numbers, while Nokia, Sony Ericsson and Motorola underperformed and lost market share.Samsung shipped 60.2 million handsets worldwide during the quarter, which was up 16 percent from the 51.8 million units in the third quarter of 2008. This grew Samsung's market share from its 19.2 percent in the second quarter to 20.7 percent, crossing what Mawston describes as the "psychologically important" 20 percent mark."This was the first time a vendor other than Nokia has shipped more than one-fifth of the world's handsets since Motorola's RAZR-heyday performance in 2006," wrote Mawston. "The key to Samsung's growth has been an attractive portfolio of touchphones and an expanding retail presence across multiple regions."On Nov. 1, Sprint will strengthen its Android lineup by offering the Samsung Moment, and Samsung will additionally supply T-Mobile with the Android-running Behold II. LG, up from a weak 23 million units in the third quarter of 2008, shipped an all-time high of 31.6 million handsets in the third quarter of 2009. "LG unveiled an Android model and several Windows Mobile 6.5 devices during the quarter, in a move to develop its underperforming smartphone division," wrote Mawston, pointing out LG's bolstering of what had been its weak markets, notably North America and Western Europe.While Apple holds just 2.5 percent of global market share, it also performed very well, growing its volume by 7 percent, from 6.9 million iPhones a year ago to 7.4 million in third quarter of 2009."Following the vendor's decision to keep the earlier 3G model on the market at a lower retail price, Apple's competitors in the smartphone market are now faced with competitive pressures on both the user-experience and the pricing fronts," Mawston wrote.Market leader Nokia, which on Oct. 13 branched out and entered the PC market, with the introduction of the Booklet 3G, underperformed the handset industry average for the fifth consecutive quarter, shipping 108.5 million handsets worldwide in the third quarter. This was down 8 percent from the 117.8 million units it shipped a year earlier, dropping Nokia's market share, Mawston estimates, to a near-term low of 36 percent, from 40 percent in the second quarter. Sony Ericsson shipped 14.1 million handsets worldwide during the quarter, which was down 45 percent from a year earlier. Operating margins, however, showed sequential improvement, and if the company can continue this - and it does have several new phones coming out - Strategy Analytics estimates that Sony Ericsson may return to profitability in third quarter of 2010.Fifth-place Motorola shipped 13.6 million handsets worldwide during the third quarter, which was down from 14.8 million the quarter before and 25.4 million a year earlier. Good news, however. "We believe the future outlook is brightening," wrote Mawston. "Motorola's cost base has been streamlined and its high-end handset portfolio has been strengthened. Motorola announced two Android smartphones, the Droid and the Cliq, and unveiled its complementary, social networking-focused MotoBlur service."The Droid, which analysts and early reviewers have high expectations for, will arrive on the Verizon Wireless network for $199 on Nov. 6, while the Cliq will be available in wide release on Nov. 2 from T-Mobile. For the fourth quarter of 2009, Strategy Analytics expects 300 million handsets to ship worldwide, growing 3 percent from the 294 million units a year earlier.

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